The City of Nelson Achieves Nearly 100% Compliance with is Short-Term Vacation Rentals Bylaw

Almost 100% compliance with its short-term vacation rentals bylaw  

immediate identification of 80% of illegal short-term vacation rentals from host compliance data 

Created a Level Playing Field Between Short-Term Vacation Rentals and Other Accommodation Providers

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Challenges

Nelson is a smaller city of 10,000 people located in the interior of British Columbia, Canada. It relies heavily on tourism year round, and gets especially busy with visitors in winter for its world class skiing. There are typically around 100 short-term vacation rentals listings available to visitors. Affordable housing is a significant issue for the city, where the vacancy rate can fluctuate between zero and 0.06%. An estimated 39% of Nelson households are rentals, and low residential vacancy rates present a real challenge for housing. 

Issues related to housing availability became more urgent for the City of Nelson after the Council received letters of complaint from local residents. Long-term residents indicated they had been evicted from their homes by landowners, who had chosen to offer their properties as short-term vacation rentals. The shortage of local housing for rent was getting worse as investors were increasingly buying up properties to put up on sites like Airbnb. 

The City of Nelson also started receiving letters of complaint from local businesses such as hotels and Bed and Breakfast establishments. These businesses are required to pay specific taxes to operate, such as a compulsory tourist tax and sales tax. Alex Thumm from the City of Nelson indicated that “these businesses are assessed for commercial property tax at two and a half times what residential property owner pays. They’re looking at the short-term rental market and indicating that it simply is not fair.”

In contrast, illegal short-term vacation rentals did not pay these, which was seen as unfair and created an unlevel playing field. Short-term vacation rentals were benefiting from the tourist tax, as this money is used to promote Nelson tourism, yet they were not contributing to it. Hotels and Bed and Breakfast establishments also have higher costs related to health and safety regulations, which again the short-term vacation rentals were not enforced to follow, which could put tourists at risk. 

Objectives

The Council at the City of Nelson knew they needed to take action, and set out to solve this problem while balancing the needs of different stakeholder groups.  The main objectives were ensuring a level playing field for accomodators; safe accommodation facilities for visitors and tourists, and; meeting the housing needs of local long-term renters.    

Given the limited resources of the City, they also knew they needed a cost effective solution which could help them monitor and manage short-term vacation rentals based on their existing resources. 

Solution

To get short-term vacation rentals under control, Nelson undertook an extensive consultation process to gather input from the different stakeholders, ranging from local businesses, short-term vacation rental hosts to residents. Feedback from these parties was solicited by online surveys, interviews and town hall events.  

One challenge of the consultation process was getting a clear and balanced view, ensuring all stakeholders had the opportunity to share their views. Alex Thumm, a Planning and Building Analyst, was brought in by the City to help them go through the consultation process and drafting regulations related to short-term vacation rentals. Alex indicated the City of Nelson emphasized to non-compliant short-term vacation rental owners that they wanted their input as well. Knowing they were operating illegally, many operators seemed reluctant to come forward and provide input. The City of Nelson made it clear they simply wanted to understand their perspectives, why they were operating as they were, and the challenges they faced. 

To ensure all stakeholders could share their views freely, the City made use of anonymous surveys, and some illegal short-term vacation rentals hosts even agreed to speak in person. Once hosts understood that the City was not planning to ban short-term vacation rentals, but wanted to regulate them to better manage the different needs of the city, they were more willing to engage in dialog. Short-term vacation rental owners were initially defensive, but they City was able to help them understand why regulation was important, and how everyone could benefit.

The consultation period was invaluable in helping the City of Nelson understand the needs of all stakeholders, which enabled them to establish regulations for short-term vacation rentals. With this foundation in place, the City still needed a way to identify illegal short-term vacation rentals for enforcement and compliance. A constraint Nelson faced was having a small department (which ranged from three to five people) to manage monitoring and enforcement. The City identified Host Compliance as the most cost effective way for them to identify illegal short-term vacation rentals to achieve higher levels of compliance. 

Host Compliance helped Nelson immediately identify 80% of the short term vacation rentals operating in their area, and they were able to identify the remainder based on the local knowledge with their existing resources. Having this sort of visibility would be impossible for the City of Nelson without help from Host Compliance, as there were too many different vacation rental sites to monitor. Some hosts operating illegally were even trying to avoid being caught by removing and reposting their listings, which is something Host Compliance’s software monitors.  

Outcomes

According to Alex Thumm from the City of Nelson, using Host Compliance has helped them achieve almost 100% compliance with their short-term rentals bylaw. This is something they could not have done without the aid of Host Compliance to quickly, easily and accurately identify illegal rentals. According to Alex Thumm, “A lot of vacation rental providers are on more than one platform which makes it all the more difficult to track. It simply wouldn’t be possible to have an acceptable compliance rate… without having an online monitoring tool like Host Compliance because of the sheer effort to identify properties - it does take a lot of time.”

The consultation process undertaken by the City enabled them to build trust and consensus by giving all stakeholders their opportunity to provide input into the process. The association that represents short-term vacation rentals supported the regulations the City ended up proposing, which was a testament to the value of the consultative approach used. New regulations took into account the differing needs of short-term vacation rental owners and offered flexibility and fairness. Limits were set on the total number of short-term vacation rentals allowed within the City, as well as a quota for how many could exist on a given city block, to avoid areas becoming too heavily concentrated with short-term vacation rentals, to preserve the local character.

Business licensing is required to be revenue neutral in the province of British Columbia, Canada, and Nelson did not want to pass the financial burden associated with short-term vacation rentals to taxpayers. By identifying rentals and bringing them into compliance, they were able to recoup project costs and make them revenue neutral. The City has seen an increased number of business licenses obtained by local short-term vacation rental providers. The additional revenue from business licensing fees has helped pay for enforcement, and City inspections have been helpful bringing more units into compliance with local and provincial regulations.

The City of Nelson has helped preserve the long-term rental housing market for local residents by preventing investors from buying up local properties and converting them to short-term vacation rentals. They have also ensured short-term vacation rentals are safer, as every home now needs to pass a safety inspection before it can be rented. Host Compliance has played an important role in what the City of Nelson was able to achieve, to improve how short-term vacation rentals operate in their city.